Sir Keir Starmer has promised not to carry out a tax raid on the banks if he is made Prime Minister as he continues his electoral pitch to the City.
The Labour leader said he would not slap a windfall tax on City financial services firms or hike the banking surcharge during Labour’s business conference in Canary Wharf.
Starmer said he was committed to fiscal discipline during his speech and maintained that a future Labour government would not increase government borrowing for day-to-day departmental spending.
A minister told City A.M. that Starmer’s comments on banking taxes today were “hypocritical”.
The government moved to cut the bank surcharge – an extra tax on banking profits – from 8 to 3 per cent last month to partially offset the incoming Corporation Tax rise.
Shadow chancellor Rachel Reeves previously railed against the move, however Starmer ruled out a potential reversal of the policy if Labour wins the next election.
When asked by City A.M. whether he could rule out any plans to “soak the banks” and hike their taxes, Starmer said: “Yes.”
He added: “Very, very clear fiscal rules have been in place for us now for 14, 15 months. We will ensure they are in place and adhered to the moment we get into government.”
Around 350 business figures attended today’s event, which saw executives from Aviva and HSBC give short addresses.
It comes amid Starmer and Reeves’ so-called “salmon scrambled eggs offensive”, which has seen the pair meet hundreds of City bosses over the past year.
Despite this, Labour was still against cutting the bank surcharge and against lifting the bankers’ bonus cap – two measures confirmed by chancellor Jeremy Hunt last month.
“Starmer’s a hypocrite and he’ll say anything in front of any audience. A bit like Boris really,” a Conservative minister said.
Reeves told journalists at the event that scrapping the bonus cap – an EU regulation which limits bankers’ bonuses to no more than 100 per cent of their fixed pay or double that with explicit shareholder approval – is not “the right priority at the right time”.
However, she refused to say whether a Labour government would bring the bonus cap back.
“We don’t think it was the right thing to do,” she said.
“The government, we’ve just been discussing this, have been calling for pay restraint in every sector apart from in banking, where they’ve actually done the exact opposite,” Reeves said.
“No restraint necessary – fill your boots. I don’t think it’s the right priority at the right time. We’ll set out our plans ahead of the election.”